U/s 17(1) 'Salary' includes the value of any perquisite allowed or amenity provided by employer to employee. The world 'perquisite' has not been defined under Income-tax Act 1961. Perquisite simply means any casual emolument attached to an office. It can also be defined as "any casual emolument, fee or profit attached to an office or position, in addition to salary or wages". Perquisites may be given in a variety of forms. Value of perquisites is chargeable to tax under the head salary only if these perks are received by an employee from his or her employer and employer may be a present, past or prospective one. Eg: Rent free House, motor car facility
Valuation of Perquisite of Motor Car or any other Automotive Conveyance
In case employer had provided a car or any other vehicle for the private use of the employee or any other member of his family, it is a perquisite which is taxable in the hands of the employee provided he/she is an employee of a specified category. But if car is owned by the employee and its running and maintenance expenses are met or reimbursed by employer, then this benefit becomes a taxable perquisite in the hands of all employees.
The valuation of this perk shall be made as under :
A. Motor car is owned or hired by employer and its running and maintenance expenses are met or reimbursed by employer
(CASE 1) Car is fully used in the performance of official duties of the employee. When car is used for official work only and the employer or his family is not deriving any benefit, so no perk will be considered in this case. In this case employer is required to maintain complete record of journeys undertaken like date of journey, destination, mileage, amount spent etc. so a log book is required to be maintained. Employer is also required to give a certificate that the expenditure on car had been incurred wholly and exclusively for official work.
Value of Perk = NIL
(CASE 2) Car is fully used for the private, personal or family purposes of the employee. When employee or any member of his household is fully using the car for their private/family purpose, so it is a perk taxable in the hands of the employee. Find out the amount spent by the employer on petrol, repairs, depreciation @ 10% of cost of car or cars, salary of driver etc. and in case any amount is charged from the employee the same shall be deducted out of above mentioned expenses incurred by employer and the amount so derived shall be the valuation of this perk.
Value of Perk = Actual expenses incurred by the employer on running and maintenance of car + Salary of chauffeur + Normal wear and tear of car (10% of actual cost)- Any amount charged by employer from employee
(CASE 3) Car is used partly in the performance of duties and partly for private, personal or family purposes.
(i) The expenses on maintenance and running are met or reimbursed by the employer
(a) Where cubic capacity of engine does not exceed 1.6 litres: Rs 1,800 p.m.
(b) Where cubic capacity of engine exceeds 1.6 litres :Rs 2,400 p.m.
(ii) The expenses on running and maintenance for private or personal use are fully met by employee himself.
(a) Where cubic capacity of engine does not exceed 1.6 litres: Rs 600 p.m.
(b) Where cubic capacity of engine exceeds 1.6 litres: Rs 900 p.m.
(iii) Facility of Chauffeur:
In case of chauffeur or driver is also provided by employer to run the motor car Rs 900 p.m. shall be added in the above mentioned amounts mentioned in point
(i) and (ii) above.
Value of Perk = Amount specified for use of car + Rs 900 p.m. for driver's salary.
B. Car is owned by employee but its running and maintenance expenses are met or reimbursed by employer
(CASE 1) Car is being used wholly and exclusively for official purposes.
No value to be taxed but a proper log book must be maintained.
(CASE 2) Car is being used partly for official purposes and partly for personal or private purposes. Taxable value of this perk shall be calculated as under
Value of perk= Actual amount of expenditure incurred by employer
Less: Rs 1800 p.m. for small car and Rs 2,400 p.m. for big car
Add: Rs 900 p.m. for driver or a higher sum for official purposes subject to certain conditions
(CASE 3) Employee's car used for private/personal/family purposes and car's expenses for private use are met or reimbursed by the employer.
Value of perquisite to be taxed shall be the amount spent and reimbursed by the employer
(on running and maintenance of the car including driver's salary) for the private or family use of the car. However, in case any amount is recovered from the employee, the same shall be reduced.
C. Where the employee owns any other automotive conveyance but the actual running and maintenance expensive are met or reimbursed by the employer
(i) Employee's conveyance is being used only for official purposes :
No value to be taxed but a proper log book is required to be maintained.
(ii) Employee's conveyance used partly for official purposes and partly for personal or private purposes of the employee:
Taxable value of the perk shall be the actual amount of expenditure incurred by the employer as reduced by the amount of Rs 900 p.m. or a higher sum for official purposes subject to certain conditions.
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